8 September 1995 External T.I. 9517705 - DEEMED RESIDENT WORKING IN THE U.S. (7586-1)

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		951770
XXXXXXXXXX		G. Middleton
(613) 957-2122
September 8, 1995

Dear XXXXXXXXXX:

This is in reply to your letter of June 20, 1995 and further to our telephone conversations in which you requested information on the Canadian income tax treatment in respect of the remuneration paid to you under the Services Contract (the "Contract") you entered into with the
XXXXXXXXXX

a copy of which you faxed to us on August 16, 1995.

Our understanding of the facts in your particular situation is as follows:

You are a Canadian citizen temporarily living in

XXXXXXXXXX

Under the terms of the above-mentioned Contract, you are referred to as an "employee" and XXXXXXXXXX is referred to as the "employer". The amounts paid to you under the Contract are referred to as "wages" or "salary".

Our Comments

• You are a deemed resident of Canada pursuant to paragraph 250(1)(e) of the Income Tax Act (the "Act") and are subject to tax in Canada on the income you receive from all sources.
• In addition, you are a deemed resident of Canada for purposes of the Canada-U.S. Income Tax Convention (the "Convention") by virtue of paragraph 5 of Article IV thereof.
• With respect to the services performed under the Contract, it is our view that you are an employee of XXXXXXXXXX Accordingly, the remuneration paid to you by XXXXXXXXXX is required to be included in your income as income from employment pursuant to section 5 of the Act.
• If such employment income is subject to tax in the U.S. by virtue of the income tax laws in the U.S. and paragraph 2 of Article XV of the Convention, you would be entitled to claim a foreign tax credit pursuant to subsection 126(1) of the Act in computing your Canadian taxes payable in respect of any U.S. income taxes which are paid and payable in respect of the employment income.

We have been informed that Phyllida Flockton of our International Relations Coordination Office (613) 957-4196 will be contacting you as to whether your employment with XXXXXXXXXX qualifies for Canada Pension Plan coverage.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

c.c. Phyllida Flockton

International Relations Coordination Office